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Gold/Mining/Energy : PEAK OIL - The New Y2K or The Beginning of the Real End? -- Ignore unavailable to you. Want to Upgrade?

To: Mahatmabenfoo who wrote (319)	4/13/2005 10:00:59 PM
From: Jurgis Bekepuris	Read Replies (2) \| Respond to of 1183

There are two interesting questions that I have no answer to: 1. How much is the current oil shortage due to the low number of refineries that can handle heavy sour crude? At least one article claimed that percentage of sour oil in Saudi output increased, while very few refineries can process the output. Guaranteed, the answer to this does not avoid peak. However if the current constraint is processing capacity and not production capacity, then the peak may be farther away. 2. What would happen if oil prices shot up and we would have an instant recession? This relates to your airline/Disneyland/whatever question. Don't say "but China and India will still grow" - nope, when US sneezes, these countries catch serious bronchite. If we get a recession, they get recession too. The peak may be again delayed for 5 years or so, dependent of course on the oil decline from here. Any scenario that buys time is in the end positive, since market (and governments) can try to come up with solutions in the meantime. Finally, I wonder if the pesimists saying that 2% annual reduction of oil is horrible have counted the elasticity of demand for non-first-need items. E.g. carpets are made from oil (plastics :)). How much oil goes to such non-essential goods? How often would you replace a carpet if it went up 3-5 times in price? Granted, living in X% recession for a number of years is not attractive. Granted, noone in economics probably has explored all the implications of such recession with inflation. But it may be better than a lot of doomsday scenarios. Jurgis